Good morning, all. Thanks so much for coming today. I hope you all enjoyed the video. Now, we expanded our vision for the future based on just the tremendous response we received to last year's video and our ongoing discussions with customers as well as potential partners. I'll talk more about this vision during my remarks today, but let's get started with today's formal business. The annual meeting of shareholders of Corning Incorporated will please come to order. For those of you who don't know me, I'm Wendell Weeks, Chief Executive Officer and Chairman of the Board of Directors. Seated to my left is Denise Hauselt, Vice President and Secretary of the corporation. I'm very glad to be here and delighted to see such an excellent turnout.
Today's meeting is in three parts: the official business of the meeting, my reflections on the state of the company and its future outlook, and some concluding remarks. Following the meeting, we'll be having a special presentation from Mark Beck, Senior Vice President and General Manager of Corning Environmental Technologies, about the exciting opportunities in that business. After his presentation, I hope that all shareholders will stay for a lunch in the tents outside. I would note that at least there's no snow. We do not have a printed agenda for this meeting, so let me explain the formal action that we'll take. The Secretary will report on the number of shares being voted and confirm that the meeting has been properly called. I will introduce the Board of Directors. I'll call for a motion for the election of 10 directors.
I'll call for motions for an advisory vote on executive compensation and to ratify the appointment of PricewaterhouseCoopers as an independent registered public accounting firm for 2012. I'll also call for a motion to approve the 2012 long-term incentive plan. Next, I'll ask for a motion to amend the restated certificate of incorporation to remove provisions requiring supermajority shareholder voting. Finally, I'll call for a vote on all five motions. After this formal action is completed, I'll discuss the state of the company. Some of you may have questions not covered in my formal remarks today. We encourage you to ask questions during today's luncheon, where you'll have the opportunity to speak directly to company officers. We can give more complete answers at that time and point you to exactly the right person to answer your question and give you the information that you need.
Company representatives will be wearing white badges to help you identify them. However, if you cannot stay for the luncheon, you can ask your question following my remarks. Now, we will start the formal part of the meeting. Just a note, any valid ballots handed up at today's meeting won't be included in this morning's preliminary vote totals, but they will be included in the official vote tally in a Corning SEC filing early next week. Madam Secretary, may we have your report on the representation of holders of stock here today?
Mr. Chairman, as of February 23, 2012, the record date for this meeting, the Corporation had outstanding 1,521,883,507 shares of common stock representing that same total of votes. There are represented here today in person and by proxy 1,308,174,211 votes, or approximately 82% of the total. A quorum requires 760,941,754 votes.
As you've heard, a quorum is present. May we now have a report on the proof of call and notice of this meeting?
Mr. Chairman, I have certified lists of all record holders of common stock at the close of business on February 23, 2012, and the affidavit of Computershare Communication Services dated March 14, 2012, certifying to the March 13, 2012, mailing of notice of this meeting and proxy material to each shareholder of record.
Thank you. Please file these documents with the meeting records. Now, it is our practice not to have the Secretary read last year's meeting minutes. However, if anyone wishes to examine last year's minutes, they should see Ms. Hauselt after the meeting. I will now introduce the Board of Directors and ask them to stand when I say their name. Please hold your applause until everyone has been introduced. Dr. John Seely Brown, retired Chief Scientist of Xerox . Dr. Stephanie Burns, retired Chairman and Chief Executive Officer of Dow Corning Corporation. Mr. John Canning Jr., Co-Founder and Chairman of Madison Dearborn Partners . Mr. Richard Clark, retired Chairman, President and Chief Executive Officer of Merck. Mr. Robert Cummings Jr., Vice Chairman of Investment Banking of JPMorgan Chase. Mr. James Flaws, Vice Chairman and Chief Financial Officer, Corning Incorporated. Mr. Gordon Gund, Chairman and Chief Executive Officer of Gund Investment Corporation. Mr.
Kurt Landgraf, President and Chief Executive Officer of Educational Testing Service. Dr. Deborah Rieman, Managing Director of Equus Management Company and retired President and Chief Executive Officer of Checkpoint Software Technologies. Dr. Onno Ruding , retired Vice Chairman and Director of Citicorp and Citibank. Mr. William Smithberg, retired Chairman, President and Chief Executive Officer of Quaker Oats. Mr. Hansel Tookes, retired Chairman and Chief Executive Officer of Raytheon Aircraft. Dr. Mark Wrighton, Chancellor and Professor of Chemistry at Washington University in St. Louis. Most of you know two of our former directors who are here today, Jamie Houghton and Amo Houghton, who have also served as Chairman and CEO. Although they are retired from active service, they remain a vital part of the Corning family. We value their counsel and we're honored by their ongoing participation. The first business of the day is to elect 10 directors for one-year terms. Ms.
Lawrence, may I have the oath of inspectors of election? Thank you. Madam Secretary, please affix this oath of inspectors of election to the meeting minutes. I now call for nominations for directors.
Mr. Chairman, I move that the following be elected directors of the Corporation to serve until their successors have been elected: John Seely Brown, Stephanie Burns, John Canning Jr., Richard Clark, James Flaws, Gordon Gund, Kurt Landgraf, Deborah Rieman, H. Onno Ruding, and Mark Wrighton.
I second that motion. Is there any discussion? The second proposal calls for an advisory vote of shareholders approving the Corporation's executive compensation as disclosed in the proxy statement. I will now entertain a motion and resolution for that approval.
Mr. Chairman, I move the adoption of the following resolution. Resolved, that the total compensation paid to the company's Chief Executive Officer, Chief Financial Officer, and other most highly compensated executives, as disclosed in the proxy statement for the 2012 annual meeting of shareholders, pursuant to the disclosure rules of the Securities and Exchange Commission and Item 402 of Regulation S-K, including the compensation discussion and analysis and the supporting tabular and related narrative disclosure on executive compensation, is hereby approved.
I second the motion. Is there any discussion? The third proposal calls for ratification of the Audit Committee's appointment of PricewaterhouseCoopers as Corning' s public accounting firm for 2012. I will now entertain a motion and resolution for that ratification.
Mr. Chairman, I move the adoption of the following resolution. Resolved, that the shareholders of the corporation ratify the Audit Committee's appointment of PricewaterhouseCoopers as the corporation's independent registered public accounting firm for the fiscal year ending December 31, 2012.
I second that motion.
Is there any discussion? Now, as the fourth proposal, we have the 2012 long-term incentive plan. We're asking for a new plan to replace the 2005 equity plan for employees. The 2012 long-term incentive plan would authorize a maximum of 85 million shares of common stock and will expire on May 1, 2021. The main features of the plan appear in the proxy statement.
Mr. Chairman, I move the adoption of the following resolution. Resolved, that the shareholders of the Corporation approve the adoption of the 2012 long-term incentive plan.
I second the motion. Is there any discussion?
The fifth proposal deals with amending the company's certificate of incorporation to remove the provisions currently requiring supermajority shareholder voting. The current certificate requires 80% shareholder voting for certain board governance changes, as well as 80% of outstanding shares to approve some types of business combinations. If a majority of shareholders approved the proposal, the supermajority provisions would be removed from the certificate of incorporation. The board would also adjust the bylaws to delete the related provisions. The details were described in the proxy statement.
Mr. Chairman, I move the adoption of the following resolution. Resolved, that the shareholders of the corporation approve the amendment and restatement of the restated certificate of incorporation to remove the provisions currently requiring a supermajority vote of the corporation's shareholders, and that the officers are authorized to do all acts necessary to put such amendment and restatement into effect and to file an appropriate restated certificate of incorporation with New York State.
I second the motion. Is there any discussion?
Now it's time to review the voting procedures for the five pending motions. Under the corporation's bylaws and SEC rules, the election of 10 directors, the advisory vote on executive compensation, the ratification of the independent registered public accounting firm, the adoption of the 2012 long-term incentive plan, and the proposal to amend and restate the certificate of incorporation will be voted by ballot. Most shareholders have already voted. If you previously voted by proxy, either by returning your proxy card, voting by the internet, or voting by telephone, there is no need for you to vote again today. Any shareholders who waited and need to vote now should use the proxy card or ballot received at home. Raise your hand and an usher in a red coat will collect it. You can also obtain a ballot from an usher by raising your hand.
Now, the ushers will collect any ballots and give them to the inspector of election later. Thank you. I now ask the inspector of election to report the results to the meeting.
Mr. Chairman, I report that each of the 10 nominees for the Office of Director was elected to the company's Board of Directors by a majority of votes cast. The advisory shareholder vote was in favor of the total compensation paid to the company's named executive officers, as disclosed in the 2012 proxy statement. The shareholder vote was in favor of adoption of the 2012 long-term incentive plan and was in favor of amendment and restatement of the restated certificate of incorporation to remove provisions currently requiring a supermajority vote of shareholders. I also report that a majority of votes cast were in favor of the ratification of the audit committee's appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2012.
Thank you. I declare that all 10 nominees for Director are elected. The shareholder advisory vote approved the company's executive compensation program. The appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm for 2012 is ratified. The 2012 long-term incentive plan is adopted, and the amendment of the company's restated certificate of incorporation to delete supermajority shareholder provisions is approved, all as indicated by the report of inspectors of election. As I said earlier, today's vote results are preliminary. Final detailed numbers will be filed with the SEC in a Form 8-K next week. That concludes the formal part of the meeting. Now I'd like to talk to you about how your company is doing. My remarks will include some forward-looking statements, and actual results might differ materially. You can find detailed risk factors in our most recent 10-K and also on Corning's website.
Last year, Corning celebrated its 160th anniversary. I told you that I believe that this is one of the most exciting times in the company's history, and I continue to feel that way. We're financially strong. We're uniquely qualified to solve tough technology problems, and we're succeeding at building a bigger, more balanced company. Of course, progress is never a straight line. In the past year, Corning has also experienced some surprises and disappointments. When we step back and assess the state of the company, we really like our hand. Corning's growth opportunities are the strongest that they have ever been, and we are well prepared and equipped to manage the challenges that we face. Today, I'll reflect briefly on Corning's 2011 performance and this year's first quarter results.
I'll explain how we are addressing our current challenges, and I'll conclude by discussing the growth drivers on our path to $10 billion in sales, including a little bit of show and tell. First, as always, I'll begin by defining who we are. This will be very familiar to many of you, but we take the time to review it at each shareholder meeting because everything we do stems from Corning's distinctive identity. Corning is a very special company with a long track record of producing life-changing innovations. Over our 160-year history, we have established ourselves as the world leader in specialty glass and ceramics. We make keystone components that enable high-technology systems for consumer electronics, mobile emission control, telecommunications, and life sciences. We grow primarily through global innovation. Innovation comes with risks, so we proactively work to create balance and stability.
We participate in diverse markets to reduce our volatility, and we have a conservative financial strategy to offset our relatively high operating leverage. Finally, and most importantly, we always live our values to ensure the trust of all of our stakeholders. This framework guides us through good times and bad. Last year, it helped lead us to several financial records despite significant economic headwinds. Let's talk briefly about our 2011 results. Overall, Corning's performance was strong in a very tough environment. Sales were $7.9 billion, the highest in the company's history. We had record gross margin dollars and an eighth consecutive year of positive free cash flow. We delivered double-digit sales growth and strengthened Corning's market position in most of our businesses. We shipped record kilometers of optical fiber. We sold record units of diesel filters, and we nearly tripled the sales of Corning Gorilla Glass.
We strengthened Corning's competitive positions with manufacturing expansions in the United States and abroad. We enhanced our technology capabilities through strategic acquisitions in telecommunications and life sciences, and we continued to innovate. In 2011, Corning topped the Patent Board Scorecard for Innovators in the Industrial Materials category for the fifth consecutive year. We secured 615 patents, up 40% from 2010, and we launched new products, including Corning Lotus Glass for high-performance displays. Of course, not everything went our way. Several events reduced Corning's profitability, and the stock price reflected this. We experienced pricing pressure and supply chain correction in the LCD industry. Raw material cost and slowing demand for polysilicon reduced earnings from our equity venture, Dow Corning Corporation. As expected, our tax rate went up significantly last year and is increasing again in 2012. Our first quarter results are consistent with our late 2011 performance.
Sales were $1.9 billion, up 2% sequentially. Gross margins were 42% of sales, and we had strong free cash flow of $344 million. However, net income was down about 6% sequentially, driven by display pricing and lower equity earnings. The company is facing some challenges, and we're once again in a time of transition as the LCD industry begins to mature. Evolution is part of Corning's DNA. Our leadership team knows how to manage transitions, and we are not afraid of challenges. How are we addressing these issues? Our mandate is clear. We must form bottom and march up. What does this mean? Simply put, we must create a new base for profitability and grow from there.
Despite significant headwinds, we remain on track to reach our goal of $10 billion in sales, and we plan to restore earnings growth and generate a substantial amount of cash flow along the way. How will we do this? First, we must reestablish positive momentum in our Display Technologies business. We have taken steps to move our LCD glass supply in line with customer demand, and we're seeing good results. We can't declare victory yet, but we are anticipating much more moderate price declines in the second quarter. We're also leveraging our proprietary fusion process to drive innovation as new display technologies emerge. Advanced displays feature more vivid images, higher resolutions, and faster response times. That creates tough technical challenges for the glass, challenges that are in Corning's sweet spot.
In January, we announced a new equity venture with Samsung Mobile Display to provide specialty glass for organic light-emitting diode devices, and we continue to develop new glass compositions to enable next-generation display technologies. Second, we're capturing double-digit growth opportunities in our other businesses. Sales were up for Telecom, Environmental Technologies, Life Sciences, and Specialty Materials in the first quarter, and we expect both sales and profits for these businesses to increase for the full year. We have more horses pulling the wagon, and that makes us less vulnerable to technology and market fluctuations. Third, we are creating new revenue and profit drivers. As I noted earlier, the primary way we do this is through innovation. Our research and development organization delivers new products to our existing business segments while also creating entirely new businesses, and it remains extremely productive.
In January, we launched Gorilla Glass 2, which I'll talk more about in a few minutes. Last month, we extended our ultra-bendable fiber into the consumer market with ClearCurve VSDN. This product enables faster and more robust connections between your computers and other devices while eliminating the need for bulky cables. Earlier this year, we secured the first order for our photovoltaic glass for solar energy applications. This is a key milestone for us and increases our confidence that this business could become a significant revenue generator. We also continue to supplement our organic growth with strategic acquisitions. Two weeks ago, we announced the agreement to acquire the majority of BD's Discovery LabWare unit. This deal will expand Corning's life sciences product portfolio, broaden our geographic reach, and enhance our ability to serve customers. We are honoring our commitment to build a bigger, more balanced company.
Of course, the fourth way we fulfill our mandate is through cost and functional excellence. We are the low-cost producer for approximately 80% of our products, and we continue to increase our manufacturing efficiencies. We're also controlling our spending and making very careful choices about projects and priorities. We believe these key steps will return Corning to consistent earnings growth, and that's the most significant factor in improving our stock performance. We're also taking a number of shareholder-friendly actions. We raised our dividend 50%. We initiated a large share repurchase program and have been buying our stock. We're generating strong operating cash flow, which creates the opportunity to enhance shareholder returns in the future. I want to be clear that Corning's management and board share your disappointment in how the stock has performed.
We don't believe that it reflects the true potential of the company, and we will continue to be proactive in addressing it. As we look beyond 2012, the company's future is very bright. Megatrends continue to play to Corning's strengths, driving growth opportunities across all of our businesses. Last year, we unveiled our vision of the future in a video titled "A Day Made of Glass." This morning, you had the opportunity to see our expanded vision based on recent interactions with customers and potential partners. Now, we're excited about this world of communication and connection because Corning is uniquely qualified to help bring it to life. It's a world that depends on highly engineered specialty glass and fiber optics technology to provide immersive displays, intuitive interfaces, and real-time information. We've been overwhelmed by the tremendous response to our vision.
The first video generated more than 18 million views on YouTube and prompted hundreds of inquiries from consumers, customers, and potential partners. Our sequel had more than 1 million views in its first week. This is terrific publicity for Corning, but what excites us the most is the energy around this vision and the feedback from companies in diverse industries that Corning's technologies are vital. I thought I'd spend the few minutes that I have left giving you a closer look at some of the products and capabilities that have excited our customers. Those of you who were here last year had the opportunity to see Jim Steiner demonstrate Gorilla Glass. This product has been a huge success for Corning. Gorilla Glass is now featured on more than 600 million devices by 30 major brands. In fact, it's the fastest growing product in the company's history. We weren't satisfied.
We wanted to make it better, and we did. In January, we launched Gorilla Glass 2 at the Consumer Electronics Show. In the video I'm about to show you, you'll see two pieces of our competitor's glass on the left and Gorilla Glass 2 on the right. Each sheet of glass is one millimeter thick. Now let's see what happens when they meet a baseball traveling at 35 mph . Wow, I like it. Gorilla Glass 2 is 25% tougher than the original Gorilla Glass when manufactured at the same thickness. We can make the glass 20% thinner and provide the same legendary toughness as the original Gorilla. That allows device makers to make smartphones and tablets that are exceptionally slim and lightweight with outstanding damage resistance. We've shattered one of the biggest myths about glass. Okay, I'm not going to give up my day job.
I've proved that we can make it incredibly tough. What else can glass do? This is a piece of our ultra-slim flexible glass. We can make this glass five times thinner than standard display glass and still provide the exceptional surface quality and performance. Why does this matter? Glass this thin allows us to revolutionize the way display and other devices are manufactured. Because traditional glass is rigid, it has always required a batch process where single sheets of glass are processed one at a time. Ultra-slim flexible glass allows our customers to move to continuous roll-to-roll manufacturing. Let's take a quick look. With this material, device makers can use the same manufacturing techniques they use for plastic films while providing all the advantages of glass. That includes superior transparency, 100% hermetic sealing, and extreme temperature performance.
Those features are very important as the industry looks to introduce high-performance devices with more demanding attributes. This glass also moves us closer to those large-scale immersive displays that you just saw in our video by enabling electronics-ready surfaces. We plan to commercialize this product later this year, and we expect to see devices made with ultra-slim glass emerge by the beginning of next year. I'll end with a product that's in development that brings together Corning's expertise in biochemistry, specialty glass, and surfaces. As I noted earlier, most of the feedback to our videos was positive, but there were also a few jokes and sort of snarky comments from people who were worried about the germs on those universal displays. We're actually working on something that addresses those issues. Corning is developing a glass that will kill drug-resistant bacteria and viruses. Let me show you how it works.
That's standard glass on the left and antimicrobial glass on the right. We've put fluorescent E. coli bacteria on both. As you can see, the bacteria grow on the normal glass but are killed on the antimicrobial glass. In fact, in this experiment, our glass killed more than 99% of the bacteria. This product is still in the early stages of development, but it's something we're really excited about. We're working with customers to understand their requirements, as well as the EPA, to ensure that we meet or exceed their rigorous criteria. Obviously, this glass has tremendous potential in hospitals, but we believe the applications could be even broader. I hope you think this idea is as cool as we think it is. I'll end there because I think that's a great example of a practical problem that may have seemed insurmountable. Yet we're addressing it with highly engineered glass.
I hope I've given you a feel for Corning's unique capabilities and the exciting products in our portfolio. I'll close by underscoring what we believe Corning offers to shareholders as a company and as an investment. We're financially stable. We ended the first quarter with $6.8 billion in cash and only $3 billion in debt. Our strong balance sheet ensures that we can weather challenges when they come and make strategic investments in our future. We have diversified market positions with businesses tied to significant growth trends. We're generating strong operating cash flow, which gives us the opportunity to enhance shareholder returns. We're one of the world's most productive R&D organizations, and we have the potential for explosive growth if just one or two of our new products succeed. We think that's a pretty compelling package. No doubt, we have some challenges ahead.
In 160 years, Corning has faced almost every kind of challenge and always come out stronger on the other side. Our current transition is one that we have anticipated, planned, and prepared for, and we are confident that we will succeed. We're confident because, first, we have been in much tougher fights than this. Second, we know what we're fighting for. We're part of an institution that really matters. It's a company that's made life-changing contributions to science and technology for more than 160 years. Third, we know who's on our side. We have 29,000 dedicated employees around the world who give their best every day. We have an exceptionally talented management committee that has led through challenges before.
I'd like to take a moment and introduce them now and ask them to stand as I say their names: James Flaws, Vice Chairman and Chief Financial Officer; Kirk Gregg, Executive Vice President and Chief Administrative Officer; Larry McCray, Executive Vice President, Strategy and Corporate Development; Dr. Jeffrey Evenson, Senior Vice President and Operations Chief of Staff. It's my pleasure to introduce Dr. David Morse, who was elected this morning as Chief Technology Officer, effective May 1. Finally, I want to recognize Dr. Joseph Miller, who retires April 30. Please stand, Joseph. After 11 years with Corning and a 35-year career at DuPont. Without a doubt, Joe is one of the strongest technology advocates this company has ever had. We're grateful for his talent, leadership, and friendship. We wish him and his wife, Rachel, a happy and healthy retirement with their 11 grandchildren.
Of course, we're also fortunate to be part of a very special community that includes retirees, neighbors, and friends. Thank you for continuing on this journey with us through good times and through bad. We've worked hard to earn your trust, and we hope that you are as excited about Corning's future as we are. Thank you. Before I return to the final business of the meeting, I want to acknowledge a colleague and friend who is participating at his last shareholder meeting. Bill Smithberg retires today from Corning's Board of Directors after 25 years of service. He has been with Corning through five CEO tenures. He has served with 44 directors. He has participated on most of our committees, and for the past year, he has served as our Lead Director, helping us honor our commitment to good corporate governance.
Bill is one of our country's most respected business leaders. We have been fortunate to benefit from his wisdom, judgment, and uncompromising integrity for the past quarter century. Please join me in thanking Bill for his tremendous service to Corning. Bill, please stand. Let's return now to the final business of the meeting. I hope that my remarks address some of the topics on your mind. I will have time to answer your questions over lunch. I will be there, as well as the other officers of the company. However, if a shareholder has a question that cannot wait until the luncheon, please ask it now. Please.
Hey, Sam.
Yes, I can, Sam.
I'm 35 years old. I retired in 1997. I was just wondering if anything could be done for the retirees as far as a little bit of increase in pay. We're going to get a lot of boys out of this. Follow these guys, you know, and done everything that we have done to make this happen. A little bit of consideration for some of us that have retired, I have to be very nice. For example, I just received your financial statement for the retirees' pocket, if you will, of how much money is there. For the past three years, it has increased. I complimented to me for doing an outstanding job of diversification, if you will. If there's something that can be done to us like this, I appreciate that.
Thank you, Sam. I want to make sure that I understand your question. You really are making two points. First, you've noted that our pension plan is fully funded and has done well, which is good, and you appreciate that. Second, given that fully funded status, you would like us to look at doing some sort of cost of living adjustment or some sort of adjustment in the pension payout. Do I understand your question, sir? Okay, good. What we will do is take a look at this. We usually look at it every year or two, and we will examine that and let you know. Okay? Thanks very much, Sam. Are there any other questions? Yes, please.
Hi, good morning. I'm Darlene Harris. I'm a shareholder, and I noticed in your report that Corning had not discussed the rate that now is a 51% in sales. I'm wondering what strategies you're going to use to expand that so that you're not so susceptible to those fluctuations, you know, with one major customer that's down the whole company.
If I understand it, as you take a look at the customer concentration that we have as we report on our top customers and how much of our sales comes from them, it looks very concentrated to you. You're asking what we are doing to try to diversify that out so we are not so dependent on what happens at just one or two of our customers. I understand your question. This is actually a fabulous question and one that we work on all the time. It gets to how we become a more balanced company. Our history quite often is filled with these incredible home runs in a given technology area because usually we've invented something that's new to the world as part of a system that is new to the world.
When that happens, we have these very rapid growth periods and usually a high degree of industry concentration because we make a keystone component that only a few people in the world have the capital and the expertise to know how to use. In a way, you've identified one of the real volatility parts of our innovation model. We seek to address it by making sure we put numbers of bets in very different markets. Actually, the recent acquisition of BD Discovery Labware is about that. That's a business that has a very fragmented customer base, and we're seeking to increase those pieces of our company that have more of that type of characteristic. That being said, I believe we're still going to be relatively concentrated in the near future, mainly because of how our innovation model tends to work. We'll keep working on it.
It's an excellent question and an excellent suggestion. Any other questions? Yes, please.
Dr. Martin, I'm sorry if you're all over. I have a very simple request, sir. Would the corporation influence the foundation to perform matching grants for retirees?
If I understand your request, it is historically we used to do a matching gift program for retirees. During one of our deeper financial challenges, we stopped doing that. You are asking that the foundation consider restoring that matching gift. The foundation will consider. We will raise that at an upcoming foundation meeting, sir. Yes.
I'm sorry. Also, one whose father's death was hasty as well, the hospital acquired MRSA infection. When you talked about the glass, I believe you specifically mentioned both MRSA and viruses, yet the display just was a generic bacteria. What is, are you truly able also to tell viruses from that? What could be a completely different matter? Also, does it, is it actually effective against MRSA?
Your question is, is it effective against MRSA, and is it really effective against viruses? First noting, this is still early stage, but the results that we have, it kills MRSA. The results that we have is it can dramatically reduce virus loads. A lot of work left to do. Actually, the death of your father, that type of event to us is what put us down this path. We look at problems like that that can make people's lives better. When we see a situation where as much as 20% of the time you can go into a hospital and end up contracting something that you didn't go in there with, it can be quite life-threatening as a type of problem that shouldn't exist, and we ought to go tackle it. That's why we're doing it. Still early days, but we're after it. Other questions? Yes.
Our higher-up Corning blood source, how was that attacked? What exactly kind of the fact that you changed from DuPont to Adapta? How was the new fairy tale of Barack Obama?
Okay. I'll take the first one, and I may turn the second one over either to our Chief Financial Officer or our Head of HR. Your first question, if I understand it, is basically why are our taxes going up? Right? The second is, what has been the impact of the healthcare legislation on our bottom line? To the first one, what's making our tax rate go up is not that the rate on any given country has increased significantly. It's really twofold. We had, in a number of areas where we've made investments, tax breaks for as long as 10-year time periods. Think of it as a tax shelter to help induce us and make our manufacturing investment in that given country more cost-effective. As those expire, we then move to the actual effective rate in that country. That is one factor.
The other is our profits have been increasing in the United States. As that happens, the United States has a very high corporate rate. Our taxes are going up in some regions of the world that are higher tax rate, as well as we're facing expiry of some tax credits or investment incentives that we had received for many of our big LCD investments. To the second question on healthcare, Mr. Flaws, or?
The impact of the healthcare legislation has been very minor. The impact to bring in extended for dependents, typically insurance and quality, is relatively small.
Any other questions before lunch? Yes, another. I'm sorry, I apologize. How did I miss the yellow sweater? I don't know.
As a follow-up question to the antimicrobial effect, how long did that bother you?
Your question is, how long does that antimicrobial effect last in the product? How often do we have to replace it if it doesn't last that long, correct? Okay. I will say it's early days, okay? Our early results are that this lifetime on this product is very, very long. Think of it in terms of sort of double-digit years, this sort of effect. It is the type of surface you can imagine using in environments like hospitals that aren't going to be replacing constantly their surfaces. It's very intriguing, isn't it? Yeah. Great. Any other questions?
Just again, that trust with the ceramics. I saw the one article, but then I tried to go to your website and put it.
You saw the article on that we are having a DOJ subpoena related to the automotive business. We are in receipt of that. There's no new updates. We are continuing to cooperate and investigate and comply with that subpoena. Thank you.